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Bankruptcy Laws for an LLC

HomeBankruptcyBankruptcy Laws for an LLC

There are no clear bankruptcy laws for Limited Liability Companies in place. Hence, when any such company files for bankruptcy,

State Law

The United States Bankruptcy Code needs to rely on state laws for taking the appropriate decision. Although there are no set rules, but an LLC is now regarded as a legal entity.

For legal purposes, an LLC is considered as an individual and the bankruptcy is filed under Chapter 7. If it has one-member, then it is considered as a partnership and it can go for liquidation. More than one member means the LLC is a corporation and the members have a chance of getting a share of the company’s assets at the time of liquidation. The LLC may lose its existence, but its debts don’t get discharged.

When an LLC has more than one member it is imperative that all of them have their consent for bankruptcy filing, unless an agreement gives one or more members exclusive management rights.

If members of the LLC have guaranteed the debts of the company personally, then the creditors or the trustee can ask them to repay the debts. An LLC is not affected by members’ personal debts. Discussing your case details with a local bankruptcy lawyer can be really helpful

Important: The articles available on are neither legal advice, nor a replacement for an attorney. The articles are general information and guidance concerning different legal issues. We make sure that these articles prove helpful to you but we do not promise or guarantee that they are suitable to your condition. We also do not take responsibility for any loss that might cause to you using these articles. Hence, it is strictly suggested to not to rely on the information provided in these articles completely without getting expert legal advice. It is also suggested to consult or hire an attorney in case of any doubt.

Born in New York City and educated at City Law School. I am majored in Criminal Law and administration. with more than 20 years of experience I dealt with criminal cases randing from parking crimes, domestic crimes to violent crimes, drug crimes to murder cases. My scope of practice includes investigation and interview witness, building a defense strategy, negotiating with prosecution, plea bargains, trials, parole , probation , motions to dismiss or motions to suppress.